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Wednesday, 20 November 2013

If you have opened a
newspaper recently then you will no doubt have acquired at least some knowledge
about the divorce of Michelle Young from tycoon Scot Young.This divorce has been in and out of the press
for various reasons over the last seven years and the final hearing in the
financial remedy proceedings have been ongoing at the High Court before Mr
Justice Moor over the last few weeks. If you believe Ms Young then the total value of the assets being
disputed is a whopping £700m but according to Mr Young he is bankrupt and in debt to the tune of approximately £28m.Mr Young claims that he lost his millions around the time the couple
split and has been living (somewhat extravagantly) since then off the
generosity of his rich and famous friends. Ms Young’s case is that Mr Young
planned an exit strategy to keep the money from her once he realised that the
marriage was in difficulties and that the money has been hidden in various
offshore schemes and is being fed back to him via the aforementioned friends
one of whom is currently paying Mr Young’s rent of £4,000 per month.

Several of these benefactors
submitted witness statements on Mr Young’s behalf to help prove that the
vast amounts of money they are paying him are indeed generous gifts and not
part of some greater fraud. Mr Young seemed to think that submitting said
statements would be sufficient to achieve this and has argued that there was no
need for any of his witnesses to be cross examinationed. Mr Justice Moor disagreed and the likes of Sir Philip Green
(Topshop) and Richard Caring (The Ivy/Annabel’s) were called to be cross examined by Ms Young’s lawyers last week.

Procedure
for Relying on Hearsay Evidence in Family Proceedings

Whilst the issue of whether
the witnesses would need to attend for cross examination may have been dealt with
as a pre-trial issue at the start of the hearing, if Mr Young was playing by
the Family Procedure Rules 2010 then he should have issued a notice to rely on
the witness statements as hearsay evidence under FPR 23.2 (which in turn refers
to section 2(1)(a) of the Civil Evidence Act 1995) together with an explanation as to why
those witnesses need not attend.This
would have then given Ms Young the opportunity to make an application under FPR 23.4 to call those witnesses herself, which may have been what has happened
here, and/or give notice of her intention to challenge the credibility of such
witnesses under FPR 23.5. If it was
found that the witnesses need not attend then Ms Young would still have had the
option of asking that the Court gives reduced weight to the evidence set out in
the statements under section 4 of the Civil Evidence Act 1995. This would have still
be the case in the event that any of the witnesses failed to turn up which would have been a very risky thing to do if the Court had ordered them to attend as this
would put them in breach of a Court order.

Why
so risky?

There can be no doubt that
the Family Courts are taking breaches of Court orders more seriously these days
and indeed Mr Young himself has already spent time in prison earlier this yearfor failing to comply with a Court order which stipulated that he had to provide financial disclosure to his wife. This trend is no doubt set to continue
following Sir James Munby’s comments in his 7th View from the President’s Chambers where he said that attitudes to orders made by the family
courts were “slapdash, lackadaisical and on occasions almost contumelious.” He
went on to say that “The court is entitled to expect – and from now on will
demand – strict compliance with all such orders.” These comments are aimed at
everyone involved in the family law process including public bodies, parties
and non-parties to proceedings and these sentiments were further spelled out by Sir Munby in his
judgment in the recent cases of Re W (A Child), Re H (Children) [2013] EWCA Civ1177 in which he said “Non-compliance with orders should be expected to have
and will usually have a consequence”. The message is far from ambiguous and there have been other
recent decisions where there have been serious consequences for contempt of
court:

Re Davies [2013] EWHC 3294 – A
mother had removed a child from the jurisdiction and her parents and her
sister were ordered to provide information as to their whereabouts. Mr Justice
Keehan found that each of them had lied to the Court and / or failed to provide
information in accordance with Court orders and found them
in contempt at a hearing on 25 October 2013. The parents and sister were
remanded in custody until the sentencing hearing on 31 October 2013 by which
time the daughter had heard what had happened and agreed to return to the
jurisdiction with the child (a factor which weighed heavily in their favour).
They were each sentenced to 12 days in prison, to serve 6 of which time served
would count. Keehan J indicated that, had the daughter not been located and
agreed to return, the mother would have been looking at months in prison (See Brown v Davies ([2013] EWHC 3523 (Fam) for sentencing
judgement).

Ball v Shepstone [2013] EWCC 7 (Fam) – A
father was found to be in contempt for failing to file a Form E in accordance
with the terms of a court order dated 15 July 2013. He was due to file the
Form E on 12 August 2013 but failed to do so. Hewas subsequently served with committal
proceedings on 16 September 2013, and at a hearing on 03 October 2013, he was
found guilty of contempt and sentenced to fourteen days in prison and ordered
to pay the wife’s costs.

Being cross examined is not
fun, it can be a stressful and unpleasant experience, and it is therefore not
surprising that people will try to avoid it if they can. The lesson from the
Young case, or at least the most recent lesson, would seem to be that if
you are asked to, or are advising someone on, providing evidence in family
proceedings then you/they had better be prepared to stand up in court and answer
some difficult questions on that evidence. In terms of complying with Court
orders, few practitioners would ever advise a client not to comply but the
emphasis on the consequences of non-compliance may need to be cranked up a
notch in light of these recent developments.

As usual thoughts and
comments are welcome.

A final judgment in the Young v Young divorce is expected to be given on Friday, 22 November 2013.

Friday, 18 October 2013

In my post entitled Redefining marriage: Can I marry myself?
I looked at some of the legal changes that were necessary to bring the Marriage
(Same Sex Couples) Bill into law.I also
explored the broader idea of redefining marriage as being something other than
between a man and a woman, something which is very controversial and which has
and continues to be the topic of debate notwithstanding the fact that the bill
was given Royal assent on 17 July this year. I looked in particular at a case
in Brazil where three people were allowed to enter into an equal marriage.
Brazil seems to have gone a step further now and has given permission for amarriage to take place between a man and…a goat!Permission was given on the strict
understanding that the man, 74 year old Aparecido Castaldo, will not consummate
the marriage with the goat, who is named Carmelita.Despite the union getting the official go
ahead, Mr Castaldo is likely to have trouble convincing many of the legitimacy of
the marriage, not least because even those who think marriage should extend to
same sex couples are unlikely to support the definition extending to inter-species
couples, but also becausethere is a
strong chance that the bride, having already eaten her wedding dress, will no doubt try
to munch the marriage certificate as well.

Tuesday, 1 October 2013

The jurisdiction of England
and Wales, and London in particular, has gained a reputation over recent years
for being the divorce capital of the world and the favoured jurisdiction for
wives to get big pay outs from their wealthy soon to be ex-husbands. The
recent decision of M v M [2013] EWHC 2534 (Fam), where the wife was awarded a
cool £54m (the largest ever pay-out in a contested divorce), will no doubt fuel
this perception. But should it?

According the Matrimonial
Causes Act 1973, when deciding how the matrimonial assets should be divided up
the English Courts are required to take into account “all the circumstance of
the case” and a list of non-exhaustive factors to which the court is to give
regard are included in section 25 of the Act.Those factors include the length of the marriage, contributions made
within the marriage and the standard of living enjoyed before the breakdown of
the marriage. In M v M all of the family’s wealth had been generated during
that time through the husband’s business enterprises. Under English law, a
spouse who contributes to the marriage by taking care of the family’s home life
(and in doing so often sacrifices her own earning capacity) is usually held to
have made an equal contribution to the marriage and after a long marriage the
starting point for division of assets will generally be 50/50. In M v M the
parties had been married for 17 years and so the wife’s award, whilst record
breaking, represented only 50% of the ascertainable matrimonial assets.

Those coming from
jurisdictions where wives do not receive such generous pay outs, may find such
a judgement difficult to accept particularly if they consider that the wife did
not really “work” herself during the marriage and enjoyed a high standard of
living thanks to the husband’s efforts. However, there is more to this case
than a simple division of matrimonial assets after a long marriage and it would
be a mistake to think that the case of M v M was nothing more than an example
of a wife looking to use the English court’s generosity to get her hands on as
much of her husband’s hard earned cash as she possibly can.A read through of Mrs Justice Eleanor King’s
judgment quickly reveals that much of the wife’s three year legal battle was
preoccupied with the husband’s flagrant disregard for the legal system and his
attempts, at all costs, to keep all of the family’s wealth out of sight and out
of reach.His infractions included
hiding assets within company structures, forging signatures to facilitate the
transfer of assets, moving assets offshore, using his employees and other
family members to distance himself from transactions, lying in his affidavit,
disobeying court orders, issuing malicious satellite litigation and failing to attend
hearings. The final award was not 50% of all of the matrimonial assets but only
those which the wife’s legal team had managed to find and the court actually
acknowledged that the wife could have asked for more on the basis that there
was likely to be many more millions squirreled away as a result of the
husband’s schemes.

It would also be a mistake
to think that Mrs M is enjoying her big pay out. The award is only the first
step to actually getting what the court had decided she is entitled to
particularly given her husband’s determination to avoid participating fairly in
the process. Just like Yasmin Prest (whose husband’s non-disclosure
contributing to the Supreme Court upholding an order for £17m worth of property
to be transferred to her) and Michelle Young (whose husband served time in
prison for failing to comply with court orders), Mrs M will appreciate that a
court order is little more than a piece of paper if you can’t actually enforce
it. Enforcement can often mean more costs and many more months of fighting and
if the assets are offshore there may be little light at the end of the
litigation tunnel.

But despite such
difficulties, London’s reputation as the divorce capital of the world is
unlikely to be challenged any time soon and not just because wives want their
fair share of the wealth but because that wealth wants to be in London in the
first place. London is an incredible city with many international high net
worth families traveling from other jurisdictions to experience everything
that it has to offer whether on a temporary or more permanent basis. Those wanting to enjoy the benefits of having
a home in here may want to give some thought as to the consequences of the
English courts being able to accept jurisdiction should their marriage come to
an end.The risks (for both parties) can
be mitigated through the use of a pre-nuptial agreement (or post-nuptial
agreement if already married) and such agreements have become increasingly
popular in recent years since word got out that the English courts will uphold
them as long as certain conditions are met.

Tuesday, 20 August 2013

Word count: 694

Time to read: 4 minutes

The case of Vince v Wyatt [2013] EWCA Civ 495 was
heard at the Court of Appeal in May 2013 and related to an application for a
financial remedy which was brought by the Wife 27 years after the parties
separated and 19
years after decree absolute was granted. At the end of their
relatively short relationship neither party had any assets or significant
income to speak of, and the Court noted that both had embraced a “New Age” lifestyle.Over the course of the next three decades the
parties’ financial lives had little to do with the other save for a couple of
child maintenance applications by the Wife.Both parties started new relationships, the children of the family grew
up and reached maturity and the Husband launched a business recycling discarded
materials into wind turbines.That
business, to everyone’s surprise, went on to be worth millions.

Given this timeline, it is difficult not to look at the
Wife’s application with a degree of cynicism particularly when she also issued
an A v A application to the tune of £125,000 for the Husband to pay her
legal fees so that she could pay her lawyers to bring the claim against him. The Husband, perhaps understandably,
issued an application to have the Wife’s claim struck out under the seldom used
Family Procedure Rule 4.4(1). Whilst he was not successful initially the Court
of Appeal allowed his appeal on the basis that the first instance judge had
construed the rule too narrowly.The
Wife’s claim made it no further.

The analysis of Rule 4.4(1), and its relationship with its
counterpart in the Civil Procedure Rules 3.4(2), is undoubtedly the most
valuable point which practitioners can take away from this case and will be of
particular use when analysing claims which involve a significant delay between
separation/divorce and the application for a financial remedy, despite the
extremely unusual circumstances of this case.Among those unusual circumstances was the fact that there remained only
one piece of documentation relating to the original divorce proceedings, the decree
absolute, which the court was required by law to keep a copy of.

At the time of the divorce, both parties had instructed
solicitors (the Wife actually consulted with solicitors on no less than 5
different occasions between 1984 and 2011) but none had retained their
files.It was therefore not possible to know
for sure whether the Wife was even entitled to bring a financial claim or
whether any such claim had been dealt with and dismissed, although the trial judge
did acknowledge that this scenario was unlikely given the standard practice to
include such an application in the petition and the lack of financial assets at
the time of the divorce.

Whether a firm
retains the client’s files and for how long will depend on the agreement made
with the client (who is the legal owner of the files) which is usually made at
the point of engagement.If no agreement
is made the SRA’s guidance on the retention of client files suggests that firm
keep in mind any statutory limitation period which may arise out of the files
when deciding how long to keep them. Given
that there is no limitation period for a claim for a financial remedy under the
Matrimonial Cases Act 1973, how long should firms who practice family law keep
their client’s files for?After all,
file storage is not cheap and even digital data will degrade over time.The court certainly cannot be expected to
keep a complete file for every divorce, they have enough trouble keeping track
of the active cases let alone managing decades of historical files (plus who
would meet the cost?)Another solution,
which would have solved this issue in the Vince v Wyatt case, would be to
record the status of any financial claim on the Decree Absolute. Surely there
is space for an extra sentence or two setting out whether any financial claims
had been issued and/or dismissed? Any other suggestions?

A copy of the judgement for Vince v Wyatt can be found here and an analysis of the application of Rule 4.4(1) can be found here.